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BDO: High Street Recovery Thrown Into Doubt With Poor July Sales

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Six consecutive months of negative like-for-like sales underscores significant long-term challenges facing retailers.

As high streets reopened for their first full month since February, weak July in-store sales dampened hopes of a recovery, new figures by accountancy and business advisory firm BDO LLP reveal.

According to BDO’s High Street Sales Tracker (HSST), in-store like-for-like sales fell - 39.4% this month from a marginal base of +0.1% for July last year. Optimistic hopes of a quick bounce-back for the high street were tempered as July saw the sixth consecutive month of negative total like-for-like sales as well (-4.6%), which combines in-store and non-store channels.

In-store like-for-like sales for lifestyle fell by -35.4% this month from an already poor base of
-3.0% last year. After posting negative results in each week of the month, July recorded the sixth straight month of negative like-for-like sales for in-store lifestyle.

Fashion in-store like-for-like sales sank by -50.0% in July from a base of +1.2% last year. This is the fifth month of negative like-for-like sales for in-store fashion.

Homeware, however, saw an impressive rebound with in-store like-for-like sales increasing by +5.4% this month from a base of +5.8% last year. Three out of four weeks saw positive in-store sales for homeware in July, which marked the first positive monthly like-for-like sales for the category since January.

Non-store sales remained high, increasing by +81.2% in July from a good base of +20.5% last year. However, the re-opening of bricks-and-mortar retail appears to have led to a qualified diminishing compared to the months of April, May, and June which all saw non-store LFLs above +100%.

Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “July has marked yet another difficult month for struggling retailers. Despite initial optimism that the reopening of stores would see the high street bounce back, the July results tell a more difficult story. The reality is that footfall remains dismal, and some retailers opted for a more gradual approach to opening their estates last month while social distancing measures also continued to restrict capacity in-store.

Low discretionary spend remains a major factor that will continue to place a limit on the high street’s rehabilitation. In addition, the end of the Government’s furlough scheme is likely to have a heavy impact on the retail sector, which accounts for almost 10% of British jobs and has relied heavily on the scheme. It is clear that the retail sector is essential to the broader economic recovery. With more high street chains at risk and further job losses predicted, recovery looks a long way off. The high street is crying out for a confidence boost but with the full impact of coronavirus on the UK economy yet to be realised, uncertainty will prevail for the foreseeable future.”

Source : BDO

Image : AmbrosiniV / Shutterstock.com

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07 August 2020

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